Go to the Globe and Mail homepage

Jump to main navigationJump to main content

AdChoices
Diversified buses drop off workers at the Syncrude Mildred Lake plant, near Fort McKay, Alberta, in the early morning hours of September 16th, 2014 (Ian Willms For The Globe and Mail)
Diversified buses drop off workers at the Syncrude Mildred Lake plant, near Fort McKay, Alberta, in the early morning hours of September 16th, 2014 (Ian Willms For The Globe and Mail)

Suncor to speed up maintenance after Syncrude fire; will meet targets Add to ...

Suncor Energy Inc. said it would accelerate planned maintenance at the Syncrude oil sands project after a fire destroyed part of the plant’s processing unit.

Suncor said Monday it would meet production targets this year even as shipments of synthetic crude oil from the plant are curtailed until April. The company said it would handle some unprocessed volumes at its operations adjacent to the site to manage inventory.

Output at the 350,000-barrel-a-day mining and upgrading venture will ramp up gradually once the eight-week maintenance program is completed, with pipeline deliveries commencing at up to 50 per cent of capacity, it said.

In a separate statement, partner Imperial Oil Ltd. said Monday there are currently no shipments of synthetic crude from the operation. It said production levels would increase in stages as damage from the March 14 blaze is repaired, though exact timing is still being evaluated.

The outage at Syncrude interrupts what had been steadily improving performance at the troubled mining project following Suncor’s acquisition of a controlling stake in 2016.

Suncor CEO Steve Williams had touted the company’s operational know-how as a key advantage during a hostile takeover of Canadian Oil Sands Ltd., formerly Syncrude’s dominant shareholder.

He insisted throughout a months-long battle with the target that a bigger stake would lead to smoother operations at the plant, which has repeatedly missed output targets over the years owing to unplanned shutdowns.

The March fire tore through a portion of Syncrude’s Mildred Lake upgrading complex, injuring one worker and triggering an evacuation at the site located about 40 kilometres north of Fort McMurray, Alta.

Suncor said Monday that a preliminary investigation shows the explosion was caused by a loss of containment on a line near a unit that treats naphtha, a lighter hydrocarbon. The company said damage was largely isolated to an adjacent pipe rack that holds cables and electrical circuits.

Despite the reduced capacity, the company maintained its overall output target for the year in the range of 680,000 to 720,000 barrels-of-oil-equivalent (boe/d) a day. That includes an expected 150,000 to 165,000 barrels from its enlarged Syncrude stake.

The company said reliability at the plant had increased in the first two months of the year, with utilization rates of roughly 95 per cent. It also cited strong production from its other oil sands assets and from its operations offshore Canada’s East Coast.

TD Securities Ltd. analyst Menno Hulshof said in a note to clients that the impact to Suncor from the fire was not as bad as initially feared, and that the company and its partners should be able to absorb the entire cost of the outage through various insurance policies. Neither Suncor nor Imperial provided an estimate of damages.

“We would also highlight that the downtime is not terribly timed given the recent pullback in oil prices,” Mr. Hulshof said.

U.S. crude has slumped back under $50 (U.S.) a barrel as oversupply concerns outweigh production cuts by members of the Organization of Petroleum Exporting Countries and its allies.

Suncor owns just shy of 54 per cent of Syncrude. Imperial owns 25 per cent and lends technical and other support to the joint venture. Other owners are China’s state-run Sinopec, CNOOC Ltd., and Mocal Energy‎ Ltd.

Report Typo/Error

Follow on Twitter: @jeffalewis

Also on The Globe and Mail

Carbon price not behind Shell’s oil sands sale: McKenna (The Canadian Press)
 

More Related to this Story

Topics

Next story

loading

Trending

loading

Most popular videos »

More from The Globe and Mail

Most popular